Bill Rukeyser, a spokesman for the state Department of Education, said first-year lottery earnings amounted to $125.67 per student, and averaged 3.9% of each district's budget. But 1986-87 lottery funds make up on the average only 2.6% of district budgets, or about $91.03 per student.

Enough for Five Books

To put that into perspective, Rukeyser said, whereas the lottery started by supplying enough money for seven textbooks per student, it can now buy just five.

Robert Booker, chief business and financial officer for the 644-school Los Angeles Unified School District--the state's largest--said that recent changes in state funding to urban districts will cost Los Angeles schools $42 million this year.

With dwindling lottery funds unable to fill the gap, the district's budget for the coming school year was pushed back to last year's level.

"Of course we're pleased to receive any money that we can get," Booker said. "But many people perceive that the lottery funds are meeting our needs, and that's just not the case."

Part of the Package

Voters accepted the lottery in 1984 with the understanding that at least 34% of its earnings would go to public schools, community colleges and state colleges and universities. "Remember who the real winners are," pro-lottery political advertising trumpeted.

At that time, Honig opposed the Lottery Initiative, calling it an unreliable solution. He cautioned that the state's 7,300 public schools would need to use the funds for purposes that the measure prohibited, such as maintaining programs and building new facilities.

"But that's just what they are forced to do now," he said in a recent interview. "This is a deviation from what the public thought it had voted for, which was substantial support for schools."

Lottery Commission spokesman John Schade said that based on studies of changing sales patterns in the 25 other states that have lotteries, record-setting first-year profits of $692 million were expected all along to drop the second year.

"You can't really compare with sales of $500 million in the first 50 days," Schade said. "We started off at 3 million tickets a day. No one can maintain that kind of an average."

Schade added that setting up the new Lotto 6/49 game last year, which required installing 6,500 computer terminals at the point of sale and additional telephone and other costs, also cut profits considerably.

The change in funds has not harmed all districts. Those that simply did not include hoped-for lottery revenues in their budgets have not faced financial trouble from the losses.

Sue Benier, financial secretary for the Mammoth Unified Schools, said her two-school, 625-student district's budget is so small that it uses lottery funds for special projects rather than for ongoing support.

"Any source of revenue which can't be projected can't be counted on," Benier said. "We almost have to ignore the lottery funds until the end of the year, because we're worried about making our budget dependent on them."

Some Predictions

Schade said the Lottery Commission tries to predict its earnings and updates its estimates quarterly to facilitate planning by educators. "We don't call every district and tell them our figures were too high," he said. "But the information is available to them and to the Department of Education."

Despite this, the drop in proceeds still caught many by surprise.

"Unfortunately, we let ourselves rely on the lottery funding," said Peter Tom, budget office accountant for the 109-member San Francisco Unified School District. "We'll resubmit the budget to the school board in September, but I don't know if it will be balanced even then."

Tom said to correct the budget, which suffers from decreased funds from other sources besides the lottery, the district eliminated 300 of its 1,185 jobs for clerks, janitors and administrative help.

In addition, the district cut 190 teaching positions, Tom said, leaving 2,777 full-time teachers for the expected enrollment of 69,463.

Honig said he will ask the state Senate this fall to increase school funding to give districts more consistent financial support. He also said he will ask legislators to make the Lottery Commission change its advertising to reflect that 50% of its income goes to prizes and about 34% to schools.